Page 50 - Ready Set Retire

Stephen J. Kelley

won’t be regular and steady if the source runs dry. If you are
relying on your investments for core income, you always run
the chance of breaking your cash flow should you run out of
money due to bad markets, faulty budgeting, unforeseen
expenses, or just living too long. If, on the other hand, your
income is guaranteed to continue coming in as long as you are
alive, none of those things can break it. The worst that can
happen is it’s not enough, but that’s what your savings if for.
Successful planning, then, relies on securing the most ongoing,
replenishable income possible, and bridging the gap with your
savings.

Refer back to the charts. In the first scenario, you can see a lot
more white space to fill up than in the second scenario. The
difference is over $650,000. That isn’t the difference in
benefits, it’s the difference in shortfall. While this is a bit
confusing, it’s how it works. That means, to meet lifetime
income needs in scenario one, the early election, Tom and
Linda will need over $650,000 more in savings than in scenario
two. Get the picture?

So what can you think of that provides this kind of income.
Well, obviously Social Security as that has been the subject of
this chapter so far. However, there are also pensions and
annuities. Both use the same actuarial and lifespan calculations
as Social Security. Both can provide inflation-protected

40